The war in Israel spooked investors on Monday, sending major indices downward. The equity tried to recover from a low session but was depressed by soaring oil prices and general risk-off sentiment.
Things took a quick turn of delight as investors welcomed dovish comments from Fed Vice Chair Jefferson. This helped stocks to pare losses and move higher. Moreover, bond markets were closed, removing the potential risk of yield although the general movement towards safe haven like Treasury bonds could help push yield down and give equity a boost, too.
Jefferson’s comment on the possibility of taking a pause on rate hikes to assess the current economic situation is music to the ears of investors who are warry on geopolitical tensions and inflation headwinds.
With that, the Fed futures are now picking up an 11.5% possibility of a rate hike in the November FOMC meeting, which is a drop from 27% on Friday.
It is 10 October, Tuesday, 8.40 am in Singapore and 8.30 pm in New York. With the war still raging between Israel and Hamas, we maintain a cautious stance but general bullish sentiment as we await new inflation data later this week.
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